Shareholders RightsVigil Mechanism &Corporate Social Responsibility…

Companies Act, 2013 – Everthing you need to know.

Shareholders Right

Shareholders Right

Minority Shareholders Right

Class Action Suit

Who can sue

Members

If Co. having share Capital

Not less than 100 Members

Such % of Total Members

If Co. not having Share Capital

Not less than 20% of Total Members

Any class of Members or Depositors

Depositors

Not less than 100 Depositors

Such % of Total Depositors

Minority Shareholders Right

Application to Tribunal

To Restrain

Co. from doing ultra

vires act

Co. from breaching MoA or AoA

To declare resolution altering

MoA or AoA as void

Directors on acting on such resolutio

n.

co. from breaching any

law

co. for taking action contrary to

the resolution

passed

To claim

damages

Minority Shareholders Right

Oppression & Mis - Management

Affairs of the Co. conducted in a manner pre-judicial to public, Co. or members

Material change in the Co. not being in the interest of Creditors, investors, debenture holders, shareholders

Minority Shareholders Right

Who can apply

Members

If Co. having share Capital

Not less than 100 Members

10% of Total Members

Holding 10% of Issued Capital

If Co. not having Share Capital

Not less than 20% of Total Members

Minority Shareholders Right

Small Shareholder Director

Every Listed Co. may have one Director elected by Small shareholders

Request made by 1000 Small Shareholders Or 10% of the total shareholders

Whichever is lower

The Company can also appoint a Small Shareholder Director on Suo motu.

Small shareholder for this purpose mean shareholder holding nominal value of Shares of Rs. 20,000/- or less.

Shareholders Right

Shareholder’s Right

Right to receive Notices of General Meetings, Financial Statements etc.,

Right to Inspect Statutory Registers and Returns

Right to attend and Vote at Meetings

Right to receive Share Certificates

Right to Transfer his Shares

Right to receive Dividend when Declared

Right to have Right Shares

Right to Appoint Directors

Right to dissent and safegaurd his interest on increase in liability.

Right to share surplus of the assets

Reporting to Members

Reporting to Members

Extract of the Annual Return

Disclosure of Non-acceptance of

recommendations given by Audit Committee

Number of Meetings of the Board.

Statement of declaration given by

independent Directors

Criteria framed by nomination & remuneration

committee

comments on qualifications made in Audit and Secretarial

audit report.

Particulars of loans, guarantees and

investments made under Sec. 186

Particulars of contracts and

arrangements made under Sec. 188

Statement indicating Annual Performance

evaluation of its Board.

Disclosing of Composition of CSR committee

Details of material orders passed by the Regulators or Courts

or Tribunals

Many other Details…

Reporting to Members

Signing of..

Board’s Report• By Chairperson (if authorised by the Board) [or]• By 2 Directors (if there is MD, he shall sign).

Financial Statements• By Chief Executive Officer (If he is a Director) [and]• BY Chief Financial Officer [and]• By Company Secretary [and]• By Chairperson (if authorised by the Board) [or]• By 2 Directors (if there is MD, he shall sign).

Vigil Mechanism

Vigil Mechanism

Whistle Blower Mechanism

Vigil Mechanism

Introduction

A Vigil Mechanism is a policy developed by the

Board of Directors to detect and avoid, fraud or

misconduct by the company. 

Vigil Mechanism

Who shall frame

Listed Companies

Company having

Borrowed money of 50 Cr or

more from

Banks & FI.

Companies which

accepted Public

Deposits

Every Company, falls under any of the Category mentioned beside shall establish a Vigil Mechanism for its Directors & Employees to report Genuine Concerns.

Vigil Mechanism

Motive of Vigil Mechanism

To Detect and Prevent Fraud or Misconduct in the Organisation.

To protect the Interests of Whistle Blower against Victimisation.

To establish Standard Operating Procedures for reporting of unethical events through established mechanism.

To give Direct access to the Chairman of the Audit Committee in appropriate or exceptional cases.

Vigil Mechanism

Disclosure of Vigil Mechanism

Disclosure

Companies Website

Board’s Report

Vigil Mechanism

ResponsibilitiesAudit Com

mittee

•Audit Committee shall look after Vigil Mechanism•In case of conflict of interest of any member of the Committee, he has to recuse himself.

Where no

Audit Com

mittee is

required

•The Board shall appoint a director to play the role of Audit Committee.•In case of frivolous complaints the committee or the Director may take necessary action.

Independen

t Direct

ors

•Ascertain & ensure that the Company has an adequate and functional Vigil Mechanism•Report concerns of unethical behaviour or suspected fraud or violation on Company Code.

Corporate Social Responsibility.

Corporate Social Responsibility

Corporate Social Responsibility.

Need for Mandatory Provision.

The contribution to CSR made by top 25 listed

companies (in terms of sales) is Rs. 1,310 Crore

out of the average preceding 3 years profits of Rs.

1,53,490 Crore which is amounting to 0.85% of

the total profits.

Corporate Social Responsibility.

Benefits

Strengthened Brand Positioning

Enhanced Corporate Image

Increased Sales and Market Share

Increased Appeal to Investors

Ability to attract, motivate and retain employees.

Corporate Social Responsibility.

Triggering Point

Net worth of Rs. 500 Crore

or more

Turnover of Rs. 1000 Crore or

more

Net Profit of Rs. 5 Crore or

more

Every Company, during any Financial Year, falls under any of the Category mentioned beside shall constitute a Corporate Social Responsibility Committee.

Corporate Social Responsibility.

Constitution of Committee

For Companies where appointment of Independent Director is mandatory.

For Companies where appointment of Independent Director is not mandatory.

In a Private Company with 2 Directors.

Corporate Social Responsibility.

CSR Budget

The Board of the Company shall ensure that the Company spends, in every Financial Year at atleast 2% of the average Net Profits of the Company during immediately preceding 3 Financial Years.

Net Profits for this purposes of this Section shall be calculated as per the Provisions of Section 381 for Foreign Companies and Section 198 for other Companies.

Corporate Social Responsibility.

Duties of Committee

recommend the amount of expenditure to be incurred

formulate and recommend a CSR policy to the board

monitor CSR policy from time to time

1

2

3

Corporate Social Responsibility.

Duties of Board

Ensure that activities included in CSR policy are undertaken

consider & approve CSR policy recommended by committee.

Ensure that company spends, in every financial year, at least 2% of the average net profits

1

2

3

Corporate Social Responsibility.

Disclosures

To Disclose CSR Policy in Board Report.

Disclose of CSR Committee Composition in Board Report.

Reasons for note spending the CSR Budget Allocated in Boards Report.

Corporate Social Responsibility.

CSR Activities

Eradicating hunger, poverty and malnutrition

Promoting Education

Promoting Gender Equality.

Ensuring Environmental Sustainability

Protection of National Heritage, Art and Culture

Measures for the benefit of Armed Forces veterans

Training to Promote Sports

Contribution to the Funds set up by Central Government.

Contributions or Funds provided to Technology Incubators

Rural Development Projects

Undertaking CSR Activities

On its Own

In collaboration with

other Company

Third Party

Registered Society, Trust or Sec. 8

Company.

Registered Trust, Society

or Sec. 8 Company started

by Group Compani

es.

Corporate Social Responsibility.

Undertaking CSR Activities

Corporate Social Responsibility.

Restrictions

CSR Expenditure is not allowed in the Following Activities:

Activities undertaken

outside India

Activities undertaken

only for the

purposes of its

employees and their Families.

Contribution made to

the Political Parties

Amount spent more than 5% of

the CSR Budget for

CSR Capacity building

Activity not coming under the purview of Schedule

VII.

Corporate Social Responsibility.

Ceasing Effect

If the Company ceases to fall under the

Triggering Criteria, in three continuous Financial

Years, then the Company need not:

Constitute CSR Committee

Comply with the Provision of Section 135

Till such time it does not fall under triggering

Criteria.

Companies Act, 2013 – Everthing you need to know.

Thank You.

Meher Kiran Cholkar

Asst. Manager

meher@rna-cs.com

R & A Associates, Company Secretaries.